In the 1920s, Charles Ponzi thought he had an arbitrage opportunity involving the Italian and American postal systems. He was wrong. But he told everyone that his scheme was working. When new investors came in, he used their money to pay back the earlier investors. Eventually, he did not have enough new investors to pay back old investors, and his scheme fell apart.

Today, we have from the website of the Social Security Administration: “It would be most accurate to describe Social Security as a transfer payment--transferring income from the generation of workers to the generation of retirees--with the promise that when current workers retire, there will be another generation of workers behind them who will be the source of their Social Security retirement payments.”